The EU Investigates Broadcom’s $61 Billion Planned Acquisition of VMware
European Commission antitrust regulators are investigating the $61 billion acquisition of VMware by chipmaker Broadcom, saying they believe the proposed acquisition may allow Broadcom to “restrict competition” in the markets for network interface cards, fiber channel host-bus adapters and storage adapters.
Broadcom, based in San Jose, California, announced its plans to buy the Palo Alto-based VMware in May. The company said at the time that the deal would establish a business where approximately 49% of its revenue would originate from software sales. VMware’s offerings allow companies to run their own servers and in the cloud more efficiently.
The European Commission, the executive of the European Union, said in a statement that it “is particularly concerned that the transaction would allow Broadcom to restrict competition in the market for certain hardware components which interoperate with VMware’s software.”
The European Commission says it will also look into whether Broadcom might hold back rival companies like NVIDIA and Intel from building out their own smart network interface cards despite VMware’s involvement in Project Monterey.
Project Monterey was an industry-wide effort, announced in 2020, which aimed to improve the performance, manageability and security of enterprise data centers through the latest networking technologies.
“Broadcom may decrease VMware’s involvement in Project Monterey to protect its own NICs revenues. This could hamper innovation to the detriment of customers,” the European Commission said.
The U.S. Federal Trade Commission has also been looking at the deal for over five months. So far, it has given no sign of whether it’s leaning toward approving the deal or not.
Broadcom’s Growth Efforts
For its part, Broadcom has been a frequent buyer of enterprise-class software businesses over the past few years. Key Broadcom acquisitions have included:
- December 2021: AppNeta, an application and network performance monitoring software company that competes against Cisco Systems, LiveAction, ScienceLogic, SolarWinds, and Riverbed.
- August 2019: Symantec’s enterprise security business for $10.7 billion in cash.
- November 2018: CA Technologies for $18.9 billion.